How does an Israeli company that started out as a small, modest start-up, succeed in gaining such a strong foothold in China that a giant local corporation decides to buy it and even issue it for an IPO?
"As Israelis, we can quickly implement processes of development and efficient production", explains Lior Dayan, CEO of Alma Lasers, the medical aesthetics company that was acquired by the Fosun Pharma Corporation in 2013, and was the first Israeli company to be listed in Hong Kong Stock Exchange in 2017.
"Our market for products for doctors and cosmeticians is relatively small – about $ 3 billion a year – and it's very important to be able to react quickly. The development time is at most two years – including regulatory approval. If you can quickly identify market needs and trends and act upon them; and no less important – if you have a distribution channel and a strong distributor linked to the relevant channels – you can capture market share quite quickly".
"Alma Lasers was founded in 1999 by four founders, including former CEO Ziv Karni, who came from Lumenis, where I also worked. At that time, most of the Israeli companies operating in the medical devices, aesthetics and laser industries, worked according to the American method – the headquarters were in Israel, and they established an office wherever they had activity.
"Unlike them, Alma began at the edges – in Asia and in South America – and relied on strong distribution channels in these areas. Today, we operate in more than 80 countries and are very strong in China and Asia as a whole – while most of our competitors operate mainly in the US.
"We started as a start-up – but we never thought about making an exit, but wanted to grow and expand. At the beginning we had three people in China – now, after 15 years of activity, we are the number 1 company in our field in China, with more than 200 employees and more than 14 branches. An evidence that we are doing something right is that if our market grows by about 10% per year – we almost always grow a little bit more than that. For example, in the first half of 2018 we grew by 18%".
"Part of the secret of success is the trend of strengthened middle class in China – they have more disposable income for aesthetic treatments and prefer as little as possible invasive treatments done at hospitals. At the beginning of our journey, the infrastructure in China was based on governmental hospitals – and it was impossible to sell products to doctors without the approval of the Chinese FDA, which is very strict and rigid.
"It took us quite a few years to overcome these obstacles by conducting clinical trials in China, a lot of patience and a large investment in the doctors who are opinion leaders there. Slowly but surely, product after product, we were able to get all the approvals and develop a very wide portfolio.
"At the same time, as the Chinese economy grew stronger, the hospitals began opening outpatient clinics, as profit centers, and in the next stage, private hospitals were opened with state regulation, and then private chains of treatment centers (clinics and beauty parlors) on a Chinese scale. Thus, our customer base grew – and we grew up with it. The market for aesthetics became wider, but everything that was in the hands of the doctors demanded regulation and enabled us to create a very strong brand in the field of hair removal, Anti-aging, body contouring, and more".
"First of all, it's important to mention that on the day that Fosun Pharma bought us, in 2013, they planned to take us to an IPO within five years – and that exactly what happened. Hong Kong Stock Exchange was chosen since Fosun is traded there, and also in Shanghai. The Hong Kong Stock Exchange is highly conservative, and attributes high importance to net profit.
"Since we are a company that enjoys a net profit of at least 18% over the years, with strong growth – we knew we would get very high multiples, and so it was. The fact that Alma is a very strong brand in Asia – when you go to the subway stations in Hong Kong, you see our advertisements for our laser machines – also contributed to the success of the IPO".
"In many ways, the Chinese are very similar to us. They are very practical and want to make sure that we are striving to achieve what needed; they have tremendous drive and desire to succeed, and if they can do anything to achieve their goal, they will do it. However, we work with a corporation from Mainland China, and there is a difference between it and Hong Kong.
"Mainland China is more conservative, and in addition, we are majority held by Fosun Pharma, the pharmaceutical branch of Fosun International corporation. The development processes in the pharmaceutical field is relatively slow, and since we are an Israeli medical devices company with the potential to capture market share, we have a tendency to run fast.
"As far as our organic growth, they are not involved and there is no problem; but when it comes to acquisitions, we need to work closely with the corporation. As I said, they are very conservative and since the company is public, they want to make sure that we take all considerations into account.
"My way of managing this sensitivity is to maintain a continuous contact as possible with the decision makers in the corporation: the chairman of the entire corporation, the chairman of Fosun Pharma, as well as other key figures and middle-level decision makers. I try to meet them personally once a month. Once you have built trustful relations with them, you will get many resources. They just want you to fulfill your potential".
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ID: Alma Lasers
Year of establishment: 1999
CEO: Lior Dayan
Field of activity: Development, manufacturing and marketing of medical aesthetics energy-based devices for hair removal, anti-aging, body contouring and more.
Number of employees: 413
Revenues in the first half of 2018: $US78 million – an increase of 18% YOY.
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